Retirement

30.11.-0001Take note - what you need to do before you retire

The image of a retiree lounging on their recliner in front of the telly, with comfy slippers and a cup of tea at hand, is well and truly a thing of the past. With most of us living longer and feeling healthier, a whole range of lifestyle options abound for those in retirement.

So as that final working day looms closer, what are the most important tasks you need to tick off on your pre-retirement checklist? How do you make sure your retirement is as stress free as possible?

1. Plan your retirement

Ensuring a worry-free retirement means planning in advance – not a quick trip to a financial adviser the week before you finish your career for good. Director of Strategy Steps Louise Biti says: “Early planning may give the person time to implement solutions to avoid potential problems or allow them to reset expectations.”

Early planning can also allow you to take advantage of opportunities such as the transition to retirement strategy, says Biti. “This can provide people over the age of 55 with a significant boost in their super account balance without reducing their current available income.”

2. Work out how much money you will need

Figuring out exactly how much cash you will need in retirement is the million-dollar question, but it is important to come up with a ballpark figure. Director of superannuation at Russell Investments Steve Schubert says: “This is probably best estimated by looking at the current level of income and expenditure and adjusting for expected changes in retirement.”

AMP financial planner Darren James adds: “Around 65% of pre-retirement income is a good guide for most people. On this basis, someone who is earning $80,000 a year while they are working will need around $52,000 a year when they’re retired to maintain their lifestyle.”

3. Determine how long you expect to be retired

Central to this equation is life expectancy. Schubert says: “Of course no-one knows how long they will live for, and it depends on so many factors. However, pre-retirees should have an understanding of just how long they could potentially live for. People retiring in the near future have a better than even chance of living to age 90 or beyond.”

4. Clear your debts

Wherever possible, paying off any outstanding debt obligations prior to retirement means you won’t eat into your super savings as quickly. It can also mean more money in your pocket if you no longer have a mortgage to fund every month.

5. Take a closer look at your investments

Schubert says that for many retirees, and those close to retirement age, there is a temptation to become overly conservative when it comes to asset allocation of their super investments. However, he adds: “Becoming too conservative is likely to result in considerably less income in retirement, or conversely require a considerably higher retirement lump sump to provide an equivalent income.”

While it would be foolhardy to invest all your savings in high-risk investment products, it is worth remembering that if you retire at age 60, and end up living until 90, you are still looking at a thirty-year economic period, so it is worthwhile including some growth assets in your portfolio.

6. Create a budget

A budget or savings plan prior to retirement can help you allocate more to your superannuation fund, giving you a bigger lump sum to play with. Once in retirement phase, a budget can ensure that you don’t run through your cash too quickly.

7. Get your estate in order

We are reminded constantly to ensure that we have a current will, but there are other issues to also consider. You should make sure that your death benefit nomination forms are up-to-date, and that your assets are held in the most appropriate structure – for example, a trust, company or super fund.

James adds: “People forget to appoint enduring Power of Attorney for both medial and financial decisions. This allows someone else to act on their behalf if they are unable to do so while they alive, including making any medical decisions.”

8. Get government support

Your superannuation savings might not stretch to the age of 90 or beyond, so it is important to remember that in your later retirement, you may be able to supplement your income with the Age Pension.

James adds: “Many people forget to register for the Pension Bonus scheme if they continue to work past Age Pension age.” In some cases, people may also be eligible for Centrelink benefits even while they are still working.

9. Don’t miss out on the extra perks

One good thing about getting older, says Biti, is that you become eligible for a whole host of concessions, but many people forget to apply for the cards that will give them these benefits.

The Seniors Card, the Pensioner Concession Card, and the Commonwealth Seniors Health Card all provide discounts on public transport, energy bills, prescription medicines, and even car registration and phone rental.

10. Decide how to manage your retirement

Prior to retirement, take some time to think about how you intend to manage your super savings. Some people may choose to establish a self-managed super fund and do the job themselves, while the majority will use managed investment products recommended by a professional adviser.

11. Get advice

If you are already nervous about your retirement savings, then get professional advice. A financial adviser can help you navigate the superannuation landscape pre-retirement, and ensure you make the most of any investment opportunities. Once you have left behind working life, they can handle the super reins so you can put your feet up.